The cotton industry has faced challenging circumstances for several years and 2005–06 was no exception. Seasonal conditions added to the pressure of limited availability of irrigation water, with temperatures approximately ten per cent hotter than average and a number of regions experiencing their hottest season on record. Also adding to the impact was the continuation of below average cotton prices during 2005-06. Despite these constraints the latest forecast for the 2006 harvest is a crop of 2.6 million bales: some 600,000 bales higher than CRDC’s pre-season estimate and worth over $1 billion in export value. This remarkable achievement is due to a combination of factors, but reflects the resilience of a dynamic and innovative industry where growers are noted for their willingness to adopt the outcomes of research. With prudent budgeting and the use of reserves in recent years, CRDC has been able to maintain R&D investments at a level that underpins delivery of the outcomes sought in its Strategic Plan for 2003 to 2008. This plan focuses R&D effort into six key research programs: People and Knowledge, Integrated Natural Resource Management, Crop Protection, Farming Systems, Plant Breeding and Biotechnology and Value Chain. In early 2006 the Corporation, its industry stakeholder, the Australian Cotton Growers Research Association (ACGRA), and other key cotton industry and government personnel put R&D progress and outcomes against the Strategic Plan under the microscope. This review resulted in a range of updated priorities, which are being used to guide R&D investments for the coming year.